Getting a measure of poverty

We are not talking about the relative poverty of the have-nots versus the haves, but the more fundamental one of ‘absolute poverty’.

It is a pity that 60 years after Independence, Indians have to quibble about how much poverty exists in the country. And we are not talking about the relative poverty of the have-nots versus the haves, but the more fundamental one of ‘absolute poverty’. An absolute in which large sections of the population do not have their basic needs fulfilled, as defined by a basket of commodities and measured by the occasional National Sample Survey (NSS). There is much to celebrate, from an optimistic point of view, because the percentage of population below the poverty line measured by the NSS has certainly gone down, though a debate rages on over where to draw that line.

The latest NSS data has not yet put to rest the controversy over shifting the goalposts. The NSS uses two sets of surveys. One is based on the Uniform Recall Period (URP) in which respondents recall their consumption during the past 30 days. The other on the Mixed Recall Period (MRP), in which items like shoes and durable goods are based on a 365-day recall while basic items like food are covered for 30 days. The latest URP-based poverty level for 2004-05 is at 27.5 per cent of the population, down from 36 per cent in 1993-94, while the MRP-based numbers put it at 21.8 per cent in 2004-05 against 26.1 per cent in 1999-2000. URP-based data for rural poverty shows a significant drop to 28.3 per cent from 37.3 per cent. This is a 9 percentage point drop compared with the 6.7 percentage point drop in urban areas.

That should be good news, but a political controversy lurks still because the Planning Commission has questioned the method of the 1999-2000 estimates, calculated when the BJP-led National Democratic Alliance government was in power. The big question concerns the removal of some commodities from the measurement basket during the NDA days. When the commodities were put back, poverty, even five years after 1999-2000, was seen to be higher.

In sum, the game is all about what period to measure and how to define poverty based on the consumption of some goods. With the Left parties on its side, the UPA government

certainly uses a tougher yardstick to measure poverty. We can take heart from the broad, secular trend that poverty is on the wane, but ruling and Opposition parties need to understand that 72 per cent of the country’s poor are in rural areas. There is much work ahead to balance the interests of ambitious growth with an inclusive strategy that reaches out to the poor. Quibbling over the measurement of poverty may be economically futile and politically useless.